Class 54 (30%) and Class 55 (40%)
For zero-emission vehicles acquired after March 18, 2019, two new CCA classes are added. Class 54 was created for zero-emission vehicles that would otherwise be included in Class 10 or 10.1, with the same CCA rate of 30%. Class 55 was created for zero-emission vehicles otherwise included in Class 16, with the same CCA rate of 40%. The CCA still applies on a declining-balance basis.
An enhanced first-year CCA deduction with the following phase-out period is available:
- 100% after March 18, 2019, and before 2024
- 75% after 2023 and before 2026
- 55% after 2025 and before 2028
The enhanced first-year allowance will be calculated by:
- increasing the net capital cost addition to the new class for property that becomes available for use before 2028, and applying the prescribed CCA rate for the class as described below:
- For Class 54, applying the prescribed CCA rate of 30% to:
- 2 1/3 times the net addition to the class for property that becomes available for use before 2024
- 1 1/2 times the net addition to the class for property that becomes available for use in 2024 or 2025
- 5/6 times the net addition to the class for property that becomes available for use after 2025 and before 2028
- For Class 55, applying the prescribed CCA rate of 40% to:
- 1 1/2 times the net addition to the class for property that becomes available for use before 2024
- 7/8 times the net addition to the class for property that becomes available for use in 2024 or 2025
- 3/8 times the net addition to the class for property that becomes available for use after 2025 and before 2028
- suspending the existing CCA half-year rule
The CCA will be applicable on any remaining balance in the new classes using the specific rate for the new class.
A taxpayer may elect to not include in Class 54 or 55 a vehicle that would otherwise be a zero-emission vehicle or a zero-emission passenger vehicle. When such an election is filed, the vehicle will no longer be considered to be a zero-emission vehicle or a zero-emission passenger vehicle. As a result, the vehicle will be included in its usual CCA Class 10, 10.1, or 16, as the case may be. Such vehicles will not qualify for the enhanced first-year CCA under the zero-emission vehicle rules. However those vehicles, that will be included in Class 10, 10.1, or 16, may be eligible for enhanced CCA under the Accelerated Incentive Investment property (AIIP) rules.
The election must be filed with the Minister of National Revenue in your Income Tax and Benefit Return for the tax year in which the vehicle is acquired. There is no provision for late-filing or amended elections.